Monday, 4 April 2016

IMF Perfidy.

Baltic Dry Index. 450 +21        Brent Crude 38.26

LIR Gold Target in 2019: $30,000.  Revised due to QE programs.

Brexit odds checker.

Brexit Quote of the Day.
There are three kinds of lies: lies, Euro lies, and EUSSR statistics.

With apologies to Benjamin Disraeli

The European Court of Auditors, the independent fiscal watchdog, has refused to give the EU's accounts a clean bill of health for the 21st year running, saying payments worth billions of pounds were irregular and possibly illegal.

We open the week with more news of the rigged financial world we really live in.  The IMF is discussing creating a deliberate Greek crisis around the time of the UK’s Brexit vote, to force Germany into agreeing to write down Greek debt. Those poor Greeks don’t stand a chance. They’re out of their league, and a mere pawn in a far bigger game of IMF rigging crises. Will there be an attempt to rig a Sterling crisis ahead of GB’s Brexit vote in an attempt to frighten GB voters to vote to remain in the EUSSR? Probably.

IMF Discussed Pressuring Germany on Greek Debt, WikiLeaks Says

April 2, 2016 — 3:50 PM BST
International Monetary Fund officials discussed the possibility of putting pressure on German Chancellor Angela Merkel to give Greece debt relief, or the IMF would withdraw from the country’s bailout program, according to a transcript of a purported conversation published by WikiLeaks.

Three officials said the refugee crisis, the U.K. “Brexit” referendum and Greece’s July deadline to repay about 2.3 billion euros ($2.6 billion) in principal on Greek bonds held by the European Central Bank were key events that could bring the issue to a head, according to the transcript on the WikiLeaks website. When asked about the account, an IMF spokesperson in an e-mail said the fund never discusses leaks or supposed reports of internal discussions.

The purported conversation underscores tensions that still divide Greece’s creditors after six years and three financial bailouts. IMF has been at loggerheads with auditors from the European Commission over the fiscal measures that the continent’s most indebted state must implement in order to meet its agreed budget targets, while Germany and other euro area countries have been insisting that the Fund will eventually have to get on board for the bailout to proceed.

 “Look you, Mrs. Merkel, you face a question, you have to think about what is more costly: to go ahead without the IMF, would the Bundestag say ‘The IMF is not on board?’ or to pick the debt relief that we think that Greece needs in order to keep us on board? Right?” the IMF’s head of European Department, Poul Thomsen, who oversees the Greek bailout program, is quoted as saying in a transcript dated March 19. The IMF’s mission chief for Greece, Delia Velculescu, who is on the call, responds that she hopes the moment the fund raises this question will come sooner, “for the sake of the Greeks and everyone else,” according to WikiLeaks. The officials discussed the prospect of an “event” that will force stalled Greek bailout talks to a conclusion, according to the transcript.

Greek government spokeswoman Olga Gerovasili said in an e-mailed statement that the IMF must clarify whether it intended to create conditions of bankruptcy just before the U.K referendum, and that Prime Minister Alexis Tsipras will contact IMF head Christine Lagarde asking for explanations.

Lagarde Says IMF Greek Plan Far Off as Talks Roiled by Leaks

April 3, 2016 — 10:32 PM BST Updated on April 3, 2016 — 10:57 PM BST
International Monetary Fund Managing Director Christine Lagarde rebuffed Greek government calls to replace top fund officials overseeing the country’s bailout, and said the IMF is “a good distance away” from a plan that would allow for additional loans to Europe’s most indebted state.

Lagarde’s comments came in response to a letter from Greek Prime Minister Alexis Tsipras, questioning whether the nation can trust the IMF and continue negotiations in good faith. His concerns were based on a leaked report from Wikileaks in which IMF officials discussed the possibility of putting pressure on Germany to give Greece debt relief.

“Successful negotiations are built on mutual trust, and this weekend’s incident has made me concerned as to whether we can indeed achieve progress in a climate of extreme sensitivity to statements of either side,” Lagarde said in a letter to Tsipras released by the IMF on Sunday. “On reflection, however, I have decided to allow our team to return to Athens to continue the discussions.”

IMF has been at loggerheads with auditors from the European Commission over the fiscal measures that the nation must implement in order to meet its agreed budget targets. Germany and other euro area countries have insisted that the Fund will eventually have to get on board for the bailout to proceed.

In an unusually strongly-worded statement, Lagarde hinted that the Greek government spied on IMF officials and leaked the transcript of the internal call. It’s critical that Greece respects the privacy of the IMF’s internal discussions and ensures the personal safety of its staff, she said.

“If it were necessary to lower the fiscal targets to have a realistic chance of them being fully met, there would be an attendant need for more debt relief,” Lagarde said. “In the interest of the Greek people, we need to bring these negotiations to a speedy conclusion.”

Officials from the IMF, the European Central Bank, the European Stability Mechanism, and the European Commission were scheduled to resume negotiations with the Greek government on Monday in Athens on the conditions attached to the country’s latest bailout.

“The leak and the e-mail exchanges between Tsipras and Lagarde have strengthened the negotiating position of the IMF toward both Greece and the Europeans,” said Nicholas Economides, a professor of economics at the New York University’s Stern School of Business. “The IMF has made it even more clear that it will not participate in the program without a debt reduction.”

Lagarde’s demand that the IMF be given privacy in Greece was “clearly accusing the Greek government of initiating the leak and invading the privacy of the IMF staff in Greece,” Economides said.

In other news, the price of crude is falling again. Presumably, the Great Vampire Squid short squeeze is now over.

Oil Drops After Saudis Say Will Freeze Output Only If Iran Joins

April 4, 2016 — 12:55 AM BST Updated on April 4, 2016 — 6:08 AM BST
Oil extended declines after Saudi Arabia’s deputy crown prince said the kingdom will freeze output only if Iran follows suit, putting in doubt the success of a proposed deal between major producers.

Futures declined as much as 1.7 percent in New York after a 4 percent drop on Friday. Saudi Arabia’s Mohammed bin Salman signaled in a interview with Bloomberg that if any country raises output, his nation will also boost sales. With producers scheduled to meet this month to discuss a pact on capping supplies, Iran’s oil minister said he’ll attend the gathering if he finds the time. Russian oil production set a post-Soviet high in March.

Oil climbed 14 percent in March after rebounding from a 12-year low this year amid speculation a global glut will ease as U.S. output falls. While Saudi Arabia, Russia, Venezuela and Qatar in February first proposed an accord to cap production to reduce the worldwide surplus and boost prices, Iran has said it plans to increase sales after international sanctions were removed following a deal to curb the Persian Gulf state’s nuclear program.

“Salman’s comment seems to be a warning to anyone looking to take advantage of an output freeze without having to cut production,” Hong Sung Ki, a commodities analyst at Samsung Futures Inc., said by phone from Seoul. “Russia’s output boost can be seen as a strategic move as it tries to increase production as much as it can before any potential output freeze kicks in.”

West Texas Intermediate for May delivery dropped as much as 61 cents to $36.18 a barrel on the New York Mercantile Exchange, and traded at $36.35 at 1:00 p.m. Singapore time. The contract fell $1.55 to $36.79 on Friday. Total volume traded was about 18 percent above the 100-day average.

Oil Speculators Bet Rally's Over as Doubts Grow on Output Freeze

April 4, 2016 – 5:33 AM BST
Money managers lost faith in oil’s recent rally as doubts grew over whether major producers will be able to agree on an output freeze.

Futures in West Texas Intermediate oil retreated last week for the first time since mid-February. Prices had surged from a low of almost 13 years on a proposal by Saudi Arabia, Russia, Venezuela and Qatar to cap oil output and reduce a global surplus. They’ll meet with other countries in Doha on April 17.

While Iran said it would attend the talks, it ruled out limiting supply as it restores exports after sanctions were lifted in January. Then Saudi Arabia’s Deputy Crown Prince Mohammed bin Salman said in an interview with Bloomberg that his country will freeze its output only if Iran and other major producers do as well. That pushed WTI down another 4 percent.

“Doubts were growing about the meeting before the Saudi comments,” said Mike Wittner, head of oil markets at Societe Generale SA in New York. “People who follow this were coming around to the position that even if an agreement could be reached to freeze output without Iran, it wouldn’t amount to anything.”

Short positions on West Texas Intermediate crude, or bets that prices will fall, rose the most since November in the week ended March 29, according to U.S. Commodity Futures Trading Commission. The liquidation of shorts during the prior seven weeks was the largest on record.
We close for the day with a new tax scandal breaking. For now it’s being desperately spun as an anti-Putin story. I suspect that this Russian story, while likely real, will turn out to be just a minor footnote in what happens next, as tax authorities globally ex-Russia, take notice. Do any of the US presidential candidates own a Panama company?

Tax authorities begin probes into some people named in Panama Papers leak

Mon Apr 4, 2016 1:00am EDT
Tax authorities in Australia and New Zealand are probing local clients of a Panama-based law firm at the centre of a massive data leak for possible tax evasion.

The leak involves more than 11.5 million documents from the files of law firm Mossack Fonseca, based in the tax haven of Panama, revealing details of hundreds of thousands of clients in multiple jurisdictions.

The documents are at the center of an investigation published on Sunday by the International Consortium of Investigative Journalists, the German newspaper Süddeutsche Zeitung and more than 100 other news organizations around the globe. Suddeutsche Zeitung reported it received the huge cache of documents and then shared them with the other media outlets.

The leaked "Panama Papers" cover a period over almost 40 years, from 1977 until as recently as last December, and allegedly show that some companies domiciled in tax havens were being used for suspected money laundering, arms and drug deals, and tax evasion.

Britain´s Guardian newspaper said the documents showed a network of secret offshore deals and loans worth $2 billion led to close friends of Russian President Vladimir Putin. Reuters couldn't independently confirm those details.

The Australian Tax Office (ATO) said on Monday it is investigating more than 800 wealthy clients of Mossack Fonseca.

"Currently we have identified over 800 individual taxpayers and we have now linked over 120 of them to an associate offshore service provider located in Hong Kong," the Australian tax office said in a statement emailed to Reuters. It did not name the Hong Kong company.

The head of Mossack Fonseca has denied any wrongdoing but acknowledged his firm had suffered a successful but "limited" hack on its database.

The firm's director, Ramon Fonseca described the hack and leak as "an international campaign against privacy".

Fonseca, who was up until March a senior government official in Panama, said in a telephone interview with Reuters on Sunday the firm, which specializes in setting up offshore companies, has formed more than 240,000 such companies and noted the "vast majority" of these have been used for "legitimate purposes."

"On the whole human beings want to be good, but not too good, and not quite all the time.”

George Orwell.
At the Comex silver depositories Friday final figures were: Registered 32.91 Moz, Eligible 121.48 Moz, Total 154.39 Moz. 

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
Today, economist Liam Halligan makes the sound economic and good government reform case for Brexit.

A Brexit vote may be the only way to get real EU reform

2 April 2016 • 1:09pm Liam Halligan
Over six weeks have passed since David Cameron confirmed the date of the UK’s historic referendum on European Union membership and it’s now less than 12 weeks until June 23.

As a card-carrying economics nerd and news junkie, I follow the increasingly febrile debate on British EU membership very closely. Doing so involves countless conversations with politicians, business leaders and strategists about the referendum – and the aftermath of a potential Brexit vote.

While political insiders obsessively trade the pros and cons of the EU, most voters currently feel, if anything, frustrated and confused by a discussion long on arguments and insults but short on facts.

So, here’s a column making a series of points about the upcoming referendum which, while vital to understanding what’s happening in my view, are rarely stressed in print.

Firstly, no one knows what will happen. The opinion polls are clearly very close. While some surveys suggest Remain is ahead and others tip Leave, almost all polls put less than five percentage points between the two camps – with around a third of voters undecided.

---- As refugees and economic migrants have streamed into Europe from North Africa and the Middle East, millions of British voters have become alarmed. Record UK annual net immigration  – 323,000 on the latest figures, over three times David Cameron’s 2011 “no ifs no buts pledge” – has already been met with record levels of immigration-related public concern.
And if, in the run-up to June 23, our TV screens show more pictures of families desperately crossing the Mediterranean, and bursting out of squalid camps, that will encourage millions of wavering UK voters to leave the EU. Immigration will play a pivotal role in the referendum, then, especially if June brings calm weather to the Med, encouraging more migrant crossings. It’s naive to think it won’t.
---- Then there’s the single currency. We’re often told the eurozone crisis, which brought turmoil to global markets during the summers of 2011 and 2012, is over.
That’s not true.
The euro remains an economic powder keg.
----If there were, the resulting financial turmoil and endless “emergency EU summitry” could easily influence UK voters. Another bout of euro-induced financial contagion would associate the EU with economic incompetence in voters’ minds, while reminding them once more of the grotesque extent to which the reach of “the European project” overextends its grasp.
If the eurozone crisis is solved, why has the European Central Bank just jacked-up its programme of quantitative easing, already over a year old, from €60bn to €80bn a month?
---- Although Britain has economic problems, we’re growing faster and creating far more jobs than our EU counterparts.

The eurozone economy, meanwhile, is “flying on one engine” and “fighting for altitude” according to a report last week from Standard and Poor’s. The ratings agency points to the impact on the euro of recent hints America’s Federal Reserve won’t be raising rates any time soon, causing the dollar to fall and making eurozone exports less competitive.

On top of that, a new official EU survey puts economic confidence across the region at a 13-month low – and that was based on research conducted before the latest terrorist atrocities.

Despite the relative strength of the UK economy, we simply don’t know what happens if Leave prevails. That’s because, having voted for Brexit, the UK then enters an “Article 50 negotiation” – named after the relevant EU Treaty clause.

---- On the latest figures, we buy £60bn a year more in goods and services from EU nations than we sell them, adding to our large trade deficit. Powerful French and German carmakers, along with Italian furniture manufacturers, would exert considerable political muscle to ensure free trade continues between the EU and a non-EU UK.
Consider, also, that if the UK chooses Brexit, voters in other EU nations – not least Finland, Sweden and Holland – could easily demand their own membership referenda. Such votes could take place during the UK’s Article 50 discussion.
My strong suspicion is that the EU would cave in to all manner of UK demands, in a bid to convince Britain to vote again to stay in and to prevent the broader EU project, as discontent spreads, from unravelling completely. Which brings us to another hot topic that barely gets any airplay – there could be two referenda.

Brexit Quote of the week.

Cameron: The gods too are fond of a joke.

With apologies to Aristotle

Solar  & Related Update.

With events happening fast in the development of solar power and graphene, I’ve added this new section. Updates as they get reported. Is converting sunlight to usable cheap AC or DC energy mankind’s future from the 21st century onwards? DC? A quantum computer next?

Graphene layer could allow solar cells to generate power when it rains

April 1, 2016
Solar energy is on the rise. Many technical advances have made solar cells quite efficient and affordable in recent years. A big disadvantage remains in the fact that solar cells produce no power when it's raining. This may change, however: In the journal Angewandte Chemie, Chinese researchers have now introduced a new approach for making an all-weather solar cell that is triggered by both sunlight and raindrops.

For the conversion of solar energy to electricity, the team from the Ocean University of China (Qingdao) and Yunnan Normal University (Kunming, China) developed a highly efficient dye-sensitized solar cell. In order to allow rain to produce electricity as well, they coated this cell with a whisper-thin film of graphene.

Graphene is a two-dimensional form of carbon in which the atoms are bonded into a honeycomb arrangement. It can readily be prepared by the oxidation, exfoliation, and subsequent reduction of graphite. Graphene is characterized by its unusual electronic properties: It conducts electricity and is rich in electrons that can move freely across the entire layer (delocalized). In aqueous solution, graphene can bind positively charged ions with its electrons (Lewis acid-base interaction). This property is used in graphene-based processes to remove lead ions and organic dyes from solutions.

This phenomenon inspired researchers working with Qunwei Tang to use graphene electrodes to obtain power from the impact of raindrops. Raindrops are not pure water. They contain salts that dissociate into positive and negative ions. The positively charged ions, including sodium, calcium, and ammonium ions, can bind to the graphene surface. At the point of contact between the raindrop and the graphene, the water becomes enriched in positive ions and the graphene becomes enriched in delocalized electrons. This results in a double-layer made of electrons and positively charged ions, a feature known as a pseudocapacitor. The difference in potential associated with this phenomenon is sufficient to produce a voltage and current.

The monthly Coppock Indicators finished March

DJIA: 17685.09 -18 Down. NASDAQ:  4869.85 +33 Down. SP500: 2059.74 -22 Down. 

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